Sky's TV throne threatened as profits are tipped to fall and competition from BT takes effect

Sky is set to report a drop in profits on Friday when it unveils full-year results, as competition from arch-rival BT takes effect.

The expected fall in operating profits to £1.2billion in the year to the end of June, compared with £1.3billion previously, is partly because of the £2.28billion cost of its contract to show live Premier League matches, which began this season.

Sky paid the record sum for the bulk of the televised matches, after bidding against BT, which paid £736 million to show a smaller selection of live games for the first time. Turnover is expected to be up to £7.6billion from £7.2billion for the year.

Heat is on: Profits at Sky, whose hits include Game Of Thrones, have fallen after a bidding war

Sky, which has about 10.5 million customers and whose hits include Game Of Thrones, is likely to point to strong growth among TV subscribers, reckons investment bank UBS.